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Latest analysis from Synectics Solutions pinpoints identity fraud accounting for 56% of all aggregate fraud classified by National SIRA members in Q1 2016 (up 1% on Q4 2015).

As part of its commitment to helping clients develop robust counter fraud strategies, Synectics Solutions has interrogated and analysed 1/3 billion financial services records in its National SIRA database to highlight current fraud trends and identify emerging fraud risks.

National SIRA is Synectics Solutions’ syndicated database that enables all of its users to share adverse intelligence in order to enhance their ability to detect and prevent financial crime from impacting their business through the power of cross sector shared intelligence.

Significant variations were identified in the prevalence of identity fraud across different financial products. The three products experiencing identity fraud as the biggest area of fraud activity were credit cards (87%), unsecured loans (72%) and savings accounts (69%). In contrast, business bank accounts and mortgages were much more likely to fall victim to ‘misuse of facility’ than identity or any other type of fraud.

The second most prevalent fraud identified through analysis of the National SIRA database was application fraud, at 31% of all fraud activity (static from Q4 2015). The highest percentage of cases of application fraud were identified on basic bank accounts at 60% (up 8% on Q4 2015), car finance/hire purchase (down 3% on Q1 2015 to 82%) and mortgages – down to 61% in Q1 2016 from 65% in Q4 2015.

Matt Stanton, Head of Product Management at Synectics Solutions commented: “These figures suggest a tightening of fraud controls at the application stage. The domination of application fraud within mortgages is expected due to the complexities involved in committing more organised fraud on this particular product”.

Of all the financial products within the analysis, current accounts remained the most attractive and targeted for fraudsters – at 55% of the total fraud in Q1 2016 (down 5% on Q4 2015). Analysis showed that 170 in every 10,000 current account applications made resulted in fraud being identified (with half of these cases being identity fraud). This compares with only 60 out of every 10,000 for overall fraud volumes. These figures indicate that current accounts are still seen as an ideal vehicle for committing organised fraud on a much larger scale across multiple product lines.

Synectics Solutions latest analysis also included a geographic breakdown of fraud that is occurring within the National SIRA database, correlated with UK postal code information. The most prominent areas for fraud activity continued to be those located around the major cities of the UK. Six of the top 10 UK postal sectors for fraud were located in and around central London, whilst Birmingham, Leeds and Liverpool also contained large pockets of fraud activity.

Matt Stanton commented: “Interestingly, the three London hotspots which are targeted most frequently are not residential areas. Instead, the focus has been on business or commercial areas where multi-residency buildings with communal areas for post are most prevalent. Also, in areas that are traditionally affluent, it is not surprising to see the organised fraud community targeting victims, as the rewards for a successfully perpetrated fraud will be lucrative”.

Whilst application fraud would appear to be more evenly spread across the UK than other types of fraud, the application hotspot for the last 12 months was Huddersfield, with the majority of fraud identified on bank account and credit card applications. Postal sectors in Birmingham and Aberdeen also featured prominently as application fraud hotspots, with bank account, credit cards and loans featuring heavily within the fraud population in these locations.

Misuse of facility fraud had a much lower level of perpetration nationally than identity fraud and is much more likely to occur in and around London and the north west conurbations of Leeds and Manchester.

Matt Stanton concluded: “The rate of fraud across the various financial service products analysed was reasonably stable, at 0.7% in Q4 2015 and 0.6% in Q1 2016. Organised criminals will be looking to exploit the uncertainty that lies ahead in the wake of the EU Referendum and financial services organisations must be vigilant and have robust counter fraud strategies in place to allow them to respond dynamically to new financial crime risks.”

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Editors Notes:
Synectics Solutions provides software services for a range of industries in the UK and internationally. For 20+ years, the company has been providing leading edge data driven solutions to help organisations harness the power of data. The systems built and hosted for clients are highly successful in creating more profitable customer relationships, reducing risk, combating financial crime, and enabling organisations to meet their compliance and regulatory commitments.